Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Debt Management Defeasance topic
No spam. Unsubscribe anytime.
Council authorizes defeasance of selected bonds using invested sinking fund to reduce outstanding debt
Summary
The Finance Executive Committee approved an ordinance allowing the CFO to establish an escrow and defease selected outstanding general obligation bonds using funds in the city's invested sinking fund, which holds roughly $250 million. The move is intended to lower the city's outstanding debt burden and inform FY26 budget planning.
The Finance Executive Committee approved a substitute ordinance authorizing the chief financial officer to establish an escrow deposit agreement and defease selected outstanding general obligation bonds using funds from the city's invested sinking fund.
Courtney Knight, chief of treasury, debt and investments, told the committee that the property tax levy is deposited into an invested sinking fund held by a paying agent, and that the fund currently contains roughly $250 million. "When we receive our property tax levy, that money goes into what's called an invested sinking fund that's held by a paying agent. That account has approximately $250,000,000 in it," Knight said. The ordinance authorizes the CFO and financial advisers to determine which outstanding bonds are most cost-efficient to defease.
Councilmembers asked whether defeasance changes the bonds' stated maturity dates; Knight said the city will be paying selected bonds off before their stated maturity and will evaluate optional redemption dates and coupon rates to identify the most efficient candidates for defeasance. Councilmembers also discussed the effect on the bond mill rate and how reducing outstanding debt could allow refinements to future levies.
The committee approved the substitute ordinance and noted the action will feed into the FY26 budget process. Committee members praised the Treasury team's analysis and asked that the mechanics and expected outcomes be coordinated with upcoming budget deliberations.
No specific list of bonds to be defeased was provided during the meeting; the CFO will work with advisers to select bonds and will complete the accounting and escrow steps authorized by the ordinance.
